USDA will issue at noon ET (Thursday 11 September) its monthly WASDE report, which presents updated supply/demand forecasts on a number of commodities. There is broad expectation among analysts and market participants that USDA will increase corn and soybean production forecasts for the 2014/15 marketing year.

Multiple reports from private analysts and crop scouts in recent weeks have indicated that the current corn crop is on track to be one of the best on record. The latest USDA weekly crop progress report showed that for the week ending 7 September (week 36), 74 per cent of the US corn crop was rated in good/excellent condition, unchanged from the previous week and 20 points better than year ago and the five year average for this week.

Corn crop conditions have been tracking above 2009 levels all year, a year in which yields posted a significant departure from trend. Current corn crop conditions in IA, Indiana and Illinois remain some of the best in the past 20 years, raising hopes of a bumper crop in these three important states.

Fears of an early frost proved to be premature and futures have been drifting lower in the last two weeks as weather threats to the corn crop have diminished. Analysts polled by Bloomberg ahead of the WASDE report on average expect USDA to bump up its estimate of corn yield from 167 bushels per acre estimated in August to about 170.7 bushels per acre, with some analysts pegging corn yields as high as 174 bushels per acre, about 5.5 per cent above trend.

A number of analysts continue to point out that in years with a highly rated crop, USDA has steadily revised crop yields higher on heavier than expected ear weights. While there is still some cautiousness about weather conditions in the next few weeks, especially the possibility of an early freeze in northern states, the general consensus is that given current conditions we should see an all time record corn crop in 2014.

Based on planted acres, which are not expected to change much after the FSA numbers come in, and with average yields of 170.7 bushels per acre, corn production in the fall of 2014 currently is projected at 14.276 billion bushels, about 244 million bushels larger than the previous estimate.

It will be interesting to see if USDA makes any changes to the old crop numbers and implied ending stocks given recent export trends. More important revisions to the old crop numbers likely will be made in the October report following the release of the quarterly grain stocks survey. Analysts also are pegging soybean production at 3.894 billion bushels, 78 million bushels larger than the August USDA estimate and some 600 million bushels larger than a year ago.

Current soybean meal supplies have been extremely tight in recent weeks, and with strong demand from pork and poultry producers Spot prices for soybean meal currently are quoted at around $583/ton, 7 per cent higher than a year ago.

Corn prices, however, are down 38 per cent. Protein availabiity should improve significantly later this year, removing a significant barrier to broiler and pork expansion. Also an important item to watch will be the changes USDA makes to forecasts for world grain supplies.

Export demand will be critical in the coming months to absorb the big increase in US domestic grain supplies . With bumper crops in other markets, lower prices may be required to enforce world buyers and help clear the market.